When Apple reports fiscal second quarter results on May 4th, one of the most important numbers investors will be watching has nothing to do with iPhone or Mac sales. It’s the amount Apple is allocating for buybacks – share repurchases for the next twelve months.
Subrat Patnaik for Bloomberg News:
For the year ahead, some analysts expect the Cupertino, California-based company to commit $90 billion to repurchases, the same as last year. Apple has historically reported its buyback plans in its fiscal second-quarter results, which are slated for May 4.
For investors, the firm’s buybacks have come to act as “a sign of their confidence in the business,” said Gene Munster, co-founder and managing partner at Deepwater Asset Management. “If something changed unexpectedly on that, it could tarnish their safe-haven status.”
Investors like buybacks because they reduce outstanding shares, boosting earnings on a per share basis and providing a lift to the stock.
In the past decade, Apple has spent $573 billion on buybacks, according to data compiled by Bloomberg, by far the most among US companies. What’s more, the firm’s buying has been relatively steady despite stock market volatility or business cycles.
Apple’s biggest buyback authorization came in 2018 when it set aside $100 billion.
MacDailyNews Take: We predict $90 billion in buybacks and a $0.24 per share dividend.
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[Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]
I always try to tell people who are dissatisfied with Apple’s dividends that Apple’s largest shareholders prefer the buybacks to dividends. I tell them if they’re unhappy with Apple’s dividends, add high-paying dividend stocks to their portfolio. I had wished Apple paid a higher dividend, but it is what it is and no amount of crying is going to change anything as Apple has to favor its largest shareholders.
I honestly can’t tell if having buybacks help attract investors as Apple’s stock hasn’t really moved all that much over the last couple of years, but I suppose it’s done slightly better than most tech stocks over that period. No matter. I’m sticking with my Apple shares as they’ve done me quite well over the decades I’ve held them.
Up until 1982, buybacks were illegal and seen as a form of market manipulation. What changed? Nothing really, except the misallocation of capital, since then.
If they were the same as divi’s, as some say, why not bump the divi up accordingly/instead?
The reason, they influence the stock price more. Repetitive circle of beni’s to management and those heaviest with the stock.
Unfortunately, dividends are taxed and buybacks aren’t yet.
No one, or at least few say, they aren’t “nice.” That they manipulate the stock price is the essence of the criticism.
Does Apple use the buybacks to provide stock options to its employees?
buybacks are just another way cook puts a lot of money in his pocket. yes, yes, other ceos too. the companies often give these ceos stock. at some later time a company does a buyback, and of course to not to look so obvious, at some later time, after supporting the shares prices in this manner, they sell their shares. remember the company will give them more shares down the line again.
the small shareholders don’t get any benefit other then more tax liability.
paying a higher dividend is the way to return money to shareholders. buybacks should use be used to go private. these ceos have just found another way to take more money out of these companies and not give it to shareholders.